The imposition of an additional 5 percent supplementary duty on mobile service usage and a Tk 100 increase in the Value Added Tax (VAT) on SIM connections is likely to negatively impact cell phone subscribers as well as the telecommunications industry.
Representatives of the mobile operators raised their concerns on Wednesday at a Post-budget Press Meet at the Association of Mobile Telecom Operators of Bangladesh (AMTOB) secretariat at Banani in the capital.
Historically, higher service prices have led customers to reduce their mobile phone usage, resulting in lower revenue collection and decreased contributions to the government treasury, they pointed out.
Additionally, the VAT increase on SIM connections, from Tk 200 to Tk 300, is likely to hinder the growth of new mobile subscribers.
These measures, resulting in the highest mobile service tax rates in South Asia, combined with high inflation, could further hinder industry growth and innovation.
Chief Corporate and Regulatory Affairs Officer of Robi Axiata Shahed Alam, Chief Corporate and Regulatory Affairs officer of Banglalink Taimur Rahman, , Chief Corporate Affairs Officer of Grameenphone Hans Martin Henrichsen, and Secretary General of AMTOB Lt Col Mohammad Zulfikar (Retd.), discussed their concerns with the journalists.
Despite requesting the government through various channels including the NBR, to bring the mobile sector taxes to a rational state, the government did not listen and imposed new levies, they said. However, this time the government has increased the tax, which will have far-reaching impacts on the economy, they added.
Previously, recommendations presented to the government were not reflected in the national budget proposal, they expressed disappointment.
According to data from the Bangladesh Telecommunication Regulatory Commission (BTRC), over 120 million subscribers out of 192.2 million SIM card holders in the country use the internet.
The internet has become an essential part of daily life, with increased usage across social media, education, shopping, and office work. Despite the progress of Smart Bangladesh, 40 to 45 percent of the country’s population remains unconnected, the AMTOB informed.
Compared to neighbouring countries, Bangladesh lags significantly in data usage at the customer level. However, there is substantial potential for revenue growth along with customer growth in this sector.
Due to the additional tax imposition, customers will have to pay Tk 139 to avail mobile services worth Tk 100, making it the highest in South Asia.
Currently, a mobile internet customer in Bangladesh uses an average of 6.5 GB of data per month, compared to 27-29 GB per month in neighbouring India. A review of consumer-level mobile internet service taxes in various countries shows the following rates: Malaysia 6 percent, Thailand 7 percent, Nigeria 7.5 percent, Singapore 9 percent, Indonesia 11 percent, Philippines 12 percent, Cambodia 13 percent, India 18 percent, Sri Lanka 23.5 percent, Nepal 26.2 percent, Bangladesh 33.25 percent, and Pakistan 34.5 percent.
At the initial stage of the “Smart Bangladesh vision”, 42 percent of the country’s population is still without telecom services. Among current mobile service users, 63 percent use mobile internet and 54 percent are 4G subscribers. This indicates that a significant portion of current users (37 percent) do not use mobile internet services and 46% are not yet using 4G services. Therefore, there is considerable potential for revenue growth in this sector.
Increasing the supplementary duty by five percent is expected to generate about Tk 1.5 billion in revenue. However, this revenue could be achieved by increasing data usage instead of raising levies, they opined. The current policy contradicts the vision of Smart Bangladesh, they said. Thus, a rational tax structure is essential to accelerate economic growth through the continued development of mobile services and increased mobile internet usage at the consumer level.
